Buying a Home / Laney Farrugia
Understanding Phantom Offers:
Phantom offers, as they are commonly known, are fictitious or fabricated competing offers presented to buyers during bidding wars. Their purpose is to create a sense of urgency, induce higher bids, and potentially drive up the property’s price. While phantom offers are unethical and illegal, they can still occur in the real estate market.
The Impact of Phantom Offers:
The presence of phantom offers can significantly affect your decision-making process and potentially cost you more money. The fear of losing out on your dream home to a non-existent competitor may push you to increase your offer or remove important conditions, compromising your financial well-being and peace of mind.
New Procedures to Address Bidding Wars:
To address the concerns surrounding bidding wars and phantom offers, real estate regulatory bodies have implemented new procedures. For example, in some regions, brokerages are now required to keep copies of all offers, including counter-offers. Additionally, buyers have the ability to verify the existence of other offers through these regulatory bodies, providing a certain level of transparency.
Protecting Yourself from Phantom Offers:
To safeguard yourself in bidding wars, consider the following strategies:
- Communicate with the seller or their agent: Reach out and ask directly if there are any other offers on the property. While they may not disclose specific details, they can provide general information.
- Observe market activity: Pay attention to the level of interest in the property. Multiple showings, crowded open houses, and a sense of urgency from other potential buyers may indicate competition.
- Work with a knowledgeable real estate agent: An experienced agent can gather information, communicate with the listing agent, and provide insights based on their market expertise.
- Make a strong offer: If you suspect there might be other offers, consider submitting a competitive offer from the start to increase your chances of being chosen and avoid missing out due to hesitation.
- Request proof of competing offers: In some cases, you can ask the seller or their agent to provide written proof of other offers, although this may not always be possible or depend on local regulations.
Bidding wars can be daunting, especially when phantom offers come into play. However, by staying informed, working with trusted professionals, and taking proactive steps, you can navigate the bidding process with greater confidence. Remember to set a budget and prioritize your financial well-being throughout the process. With the right strategies in place, you can protect yourself from the uncertainty of phantom offers and increase your chances of securing your dream home on fair terms.